Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on SIEMENS AG-REG. We currently have 21 research reports from 1 professional analysts.
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Digitalisation has been a must-have option for years!
08 Dec 16
Siemens presented its digital business on the innovation day. According to the company, total generated digital revenues grew 12% and reached €4.3bn. Around €3.3bn is software revenues and €1bn service revenues. The company employs over 17,500 software developers or 5% of the total workforce. The digital business contributed 5.4% to total revenues and is cross functional. The main digital activities are located in the Digital Factory division which generated total revenues of around €10.2bn, mainly with PLM software solutions. Assuming a similar cost structure as the software industry, the EBIT margin should range between 16% and 17%, which is a little higher than the EBIT margin of the Digital Factory division (15.3%). The acquired company Mentor Graphics will contribute an additional €1.1bn to the “Digital Factory” in the financial year 2016/17. Siemens is promoting the cloud-based and open operating system for the Internet of Things MindSphere. MindSphere will work as a platform between software and service solutions and electrification and automation.
Mentor Graphics, a perfect but expensive match
14 Nov 16
Siemens acquired Mentor Graphics for an enterprise value of US$4.5bn, or US$37.25 per share, in cash. Based on the closing price of 11 November, Siemens paid a premium of 21%. The closing of the deal is expected in Q2 16/17 (end of March). Mentor Graphics will be part of the PLM software business and integrated into the Digital Factory division. The valuation of the company is quite ambitious. Siemens is paying EV/Sales (2017E) 3.7x, EV/EBITDA 23.1x and EV/EBIT 34.3x. Siemens’ management could have bought the company earlier. In January 2016, the share priced collapsed 36.5% to US$17.43. Before the acquisition price was announced, the share price had again reached all-time high levels. Around 99.24% of the shares is owned by institutional investors, of which around 17% are hedge funds. Elliot Management, which owns 8% of the company, has already agreed to support the transaction.
Exceeding twice-raised guidance
10 Nov 16
In Q4 16 ending in September, revenues increased by 2.9% to €21.9bn. Profit from the so-called industrial business reached €2.45bn (market estimates €2.41bn). EBIT grew 9.8% to €1.79bn and the EBIT margin improved from 7.6% to 8.2%. Net income increased 20.1% to €1.15bn. Order intake however declined 14% to €20.3bn mainly due to large orders in Q4 15 (windpower of around €1.2bn and a large power & gas order in Egypt). Base orders even increased marginally in Q4 16. The book-to-bill ratio reached 0.93x. In the financial year 2015/16, revenues increased 5.3% to €79.6bn and the order intake rose 5% to €86.48bn. The book-to-bill ratio reached 1.09x. Net income declined 25.2% to €5.45bn but excluding the income from the sale of the hearing aids business and the joint venture with Bosch (BSH), net profit remained stable. Management proposed a dividend increase of €0.10 to €3.60 per share. The guidance for 2016, which was raised twice, was exceeded.
Return on equity reduced by law
13 Oct 16
In Germany, the regulatory environment for the grid network has changed. The German Network Agency (Bundesnetzagentur) has changed the imputed return on equity which will apply for the next five years. The current regulatory periods for gas and electricity will expire in 2017 (gas) and 2018 (electricity). The new regulations for gas will apply as of January 2018 and for electricity 2019. The new return on equity for new assets will be reduced from 9.05% to 6.91% and for so-called old assets (activation prior January 2006) will decline from 7.14% to 5.12%. In each case without inflation and before corporate tax and after trade tax. According to estimates the lowered return on equity (equity ratio 40% max.) will reduce the yield by around €650m per year.
Streamlining the Process Industries and Drives division
28 Sep 16
Siemens is planning to reduce the workforce by 1,700 in the Process Industries and Drives division. Management had previously intended to reduce the workforce by a total of 2,500, of which 2,000 in Germany. According to the agreement with the trade union, only 1,700 will be made redundant through early retirement, severance payments and transfer to other business units. The total amount to be spent will range between €250m and €300m, booked in the fourth quarter of the financial year 2015/16 at the end of September. We expect total restructuring charges of this division to reach €210m in Q4 15/16.
Profitability driven by strong execution
04 Aug 16
In Q3 15/16 ending in June, the order intake increased 6% to €21.06bn (at constant currency +10%) and revenues 5.1% (at cc +9%) to €19.8bn. The order backlog reached a record level of €116bn and the book-to-bill ratio 1.06x. Gross profit increased 12.8% to €5.99bn and the gross margin rose from 28.2% to 28.7%. The EBIT margin jumped from 6.8% to 10%. Eight out of nine divisions were in the target margin range. Only the Process Industries and Drives division missed the target margin. Net income declined marginally by 2.1% to €1.33bn.
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
N+1 Singer - Small-cap quantitative research - Momentum screen refresh + 10 focus stocks
12 Jan 17
We have refreshed our momentum style screen for the first time since inception on 26 July 2016. As before, the screen selects the 25 stocks exhibiting the most extreme momentum characteristics, according to our measurement method. From these we have selected 10 to focus on. Since inception the screen has underperformed both the main small-cap and micro-cap indices against a background of generally rising momentum. We have noted a subset of the basket, where decelerating momentum at the time of measurement appears correlated with significant share price falls since selection. We shall monitor this factor with the new screen, albeit there are only two such stocks showing this pattern, namely Lamprell (not rated) and Gear4music (not rated).
N+1 Singer - Morning Song 12-01-2017
12 Jan 17
As anticipated, the second half has again been stronger than H1 and results will be broadly in line with expectations. In line with this, the order book has continued to grow and is at record levels. This confirms that significant progress has been made in the Group’s shift towards its Technology Products division which, as targeted, contributed c.60% of group revenue in FY16. The small acquisition of Cable Power also gives a complementary boost to the product range. It is also worth noting the significant reduction in net debt, £1.0m ahead of our forecast. We remain supportive of the Group’s strategy and continue to see a bright future as this transition towards a design led technology solutions business continues. We look forward to more detail in March at the final results.
Upgrade on positive year-end trading update
10 Jan 17
The group has announced a positive year end update, with a stronger finish to the year delivering sales slightly better than expectations. Operational gearing results in a 7.5% increase in EPS. Cash generation is significantly better than expected. As a result, we increase our price target from 205p to 254p, based on a fair value P/E of 12.0x for 2017. With healthy growth set to carry on, the shares should continue to show robust momentum, with the potential for a special dividend an additional positive.